USW Supporting Overhaul of Corporate Bankruptcy Law for Workers

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News From USW: Fred Redmond, International vice president of the United Steelworkers (USW) testified today before a U.S. House subcommittee on the need for an overhaul of the corporate bankruptcy law to provide fairness for America's active and retired workers, while requiring accountability of employers and the courts.

The company ultimately liquidated, and that meant the termination of a defined benefit pension and a retiree insurance program.

WASHINGTON (PRWEB)September 6, 2007

Redmond told the Subcommittee on Commercial and Administrative Law, chaired by Loretta Sanchez (D-CA), that the USW "is all too familiar with the Chapter 11 process." He cited his own aluminum plant as going through bankruptcy where he worked for 25 years in McCook, Ill. "The company ultimately liquidated, and that meant the termination of a defined benefit pension and a retiree insurance program." He said those losses by workers he knew can never be forgotten.

"Insofar as the ability of a reorganizing company to reject a negotiated labor agreement is concerned, legislation in the 1980's sought to balance collective bargaining rights against the need of an employer with proven distress to obtain necessary and limited relief." He said, "We believe Congress always intended this balance to allow a reorganizing company to reject a labor agreement only as a last resort."

The USW vice president said the experience of the past 20 years illustrates that the balance has been upset. "Employers push aggressively for changes to labor and pension and retiree insurance agreements, often as a first shot rather than a last resort."

Redmond noted that more than 40 steel companies in the past decade filed bankruptcy cases, mostly the result of global overcapacity in steel and unfair imports from America's trading partners. "More than 55,000 steelworkers were laid off in that period. The Pension Benefit Guaranty Corporation (PBGC) terminated pension plans that covered 240,000 steelworkers and nearly 200,000 retirees and surviving spouses lost retiree health insurance coverage.

"The lives of far too many American workers and retirees have been crushed by corporate reorganizations," Redmond declared. "Congress can begin to set things right by reforming the bankruptcy laws."

He urged reform of the bankruptcy laws and highlighted the following needs:

-- Congress should seek to recapture the balance between company needs and worker rights, giving stronger recognition to the important role of collective bargaining.

-- Bankruptcy reform should assign higher priority to the payment of employee and retiree obligations, allowing them to be paid before other creditors who are more able to absorb losses than a worker and his or her family.

-- The principle of shared sacrifice should be enshrined, meaning that executives should not be allowed to improve their own salaries and benefits, while workers and retirees see their quality of life devastated.

-- The impact of sales and liquidations upon workers and retirees should be taken into account, giving preference to a buyer who intends to retain jobs and benefits as opposed to a buyer who simply wishes to liquidate assets.

The USW is a North American labor union representing 850,000 workers employed in metals, mining, rubber, paper, energy, chemicals and the service sector industries. For more information: http://www.usw.org/.